Hello @DanaB27
I have one further follow up question, I have just received a letter from Fidelity. I would like to understand the below highlighted section: could you please explain why they are referring to "0.00 of Roth" contributions and where the same should be reported? (I have already filed my return with the steps you have provided earlier)
Please be advised that the full amount of the excess deferral, $0.00, which represents a return of Roth contributions, must be included in your taxable income for 2022"
Dear Sir or Madam:
It has been determined that you had made an excess deferral of $37xx.xx into the above-referenced retirement plan in 2022. Under Internal Revenue Service (IRS) regulations, this excess deferral must be returned to you along with the earnings on this amount.
Since the investment return on your account for 2022 was negative, the amount being returned to you is the excess deferral minus the loss attributable to the excess. The check recently sent to you in the amount of $3xxx.xx represents this corrective distribution less any applicable withholding, and is not eligible for rollover to an IRA or employer-sponsored retirement plan. In January of 2024, Fidelity will issue an IRS Tax Form (1099-R) reflecting this distribution.
Please be advised that the full amount of the excess deferral, $0.00, which represents a return of Roth contributions, must be included in your taxable income for 2022. If you have already filed your 2022 Federal and State (if applicable) income tax returns, it may be necessary for you to file an amended return. In addition, please note that in January of 2024 you will receive a 2023 IRS Tax Form (1099-R) reflecting the distribution of this excess deferral. This form, which will be filed with the IRS, will indicate that this distribution was taxable to you in 2022 (excluding any Roth excess contributions). The loss attributable to your excess deferral, $xx.xx, may be reported as a negative amount on the "Other Income" line of your 2023 Federal and State (if applicable) income tax returns. Given the complex nature of this corrective distribution, you may wish to discuss the tax implications with a qualified tax advisor.
Should you have any questions concerning this distribution, please contact your Plan Administrator.
Sincerely,
Fidelity Investments
